We all have a problem

President Obama has a problem. We all have a problem. We also have a partial solution.

The problem is money. We do not have enough of it coming into Washington.

We do not have enough to cover what Congress and the Bush guys spent. And we have nowhere near enough to cover what the Obama budgets call for.

Here is a modest rescue plan. That is, a plan to bring more bucks to D.C. painlessly.

1. Simplify the tax code. Bring in an extra $100 billion per year.

The President has just appointed Paul Volcker to head a commission to study how to simplify our tax code. Good move. I hope he recommends something as simple as the flat tax. Or a system with just a couple of tax rates and virtually no deductions. If he does, I hope we are smart enough to adopt such a tax.

A number of countries have. They report huge gains in income for government. When Russia switched to a flat tax their tax revenues rose by 25 percent first year. By 25 percent more the next year. By 15 percent more the next year.

Suppose we switched to a flat tax. And our tax revenues rose a mere 10 percent. That is an extra $100 billion per year in extra revenue. And the government could then save billions by doing away with the jungle of forms and armies of enforcers. The IRS would not need them.

2. Legalize marijuana. Yeah, yeah, this sounds desperate. It is not. It is merely getting real.

We consume something north of $115 billion worth of weed. If we legalize it, we can tax it. Taxes would probably come to $25 billion. One organization that studies the question estimates $31 billion revenue. And we would save $11 billion in law enforcement. That is how much it costs us across the country to arrest and prosecute and jail people we catch with marijuana.

Yes, we would miss all the news headlines about the drug busts. We would no longer see the names of neighborhood kids in the police blotter.

However, all our arrests have not done much - if anything - to reduce how much marijuana the people of this country smoke. One of the reasons we finally got rid of Prohibition was that we were still drinking. And in drinking prohibited booze we were helping criminals build their empires.

We are doing the same today with weed.

3. Privatize the Post Office. Simply copy New Zealand. The Kiwis did it in 1987. They created a company that the government owns. Government cannot interfere. Politicians cannot get involved.

The NZ Post is free to deal with or not deal with unions. It can close or open any offices it feels like. It can raise or lower postal rates.

When it was created, the new company closed a lot of post offices. But it opened a few thousand outlets, in gift shops, grocery stores, etc. So folks can purchase postal services in far more places than before.

NZ Post reduced prices. Yes, you read that correctly. And it improved deliveries.

Here is the payoff. Our Postal Service will run out of money next year. So we, the taxpayers, will funnel more billions into it to cover its annual losses.

Meanwhile, if we copied the NZ Post our postal service would make about $8 billion in profit. It would then pay the shareholders (the government) $2 billion in dividends. It would have already paid $2 billion in income taxes.

It gets better. The shares owned by the government would grow in value year after year. Government could sell them to the public at some point. Or sell half the company to UPS. Washington would haul in billions more.

These three suggestions are hardly off the wall. Add up the revenue and savings from them. We are talking meaningful amounts of money. And we are sure going to need amounts like this to begin to chip away at the mountains of debt Washington is now inflicting on us.

From Tom ... as in Morgan.

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